Intellectual Property Rights and Entry into a Foreign Market: FDI vs Joint Ventures
39 Pages Posted: 22 Jun 2006
There are 2 versions of this paper
Intellectual Property Rights and Entry into a Foreign Market: FDI vs. Joint Ventures
Date Written: May 2006
Abstract
This paper investigates how the mode of entry into a foreign market can be influenced by the intensity of R&D in an industry and the protection of intellectual property rights (IPR) in a recipient country. It then analyzes the link between the IPR regime and policies that place limits on the degree of foreign ownership in a joint venture (JV). In particular, we study the effect of the IPR regime of the host country (South) on a multinational's decision between serving a market via greenfield foreign direct investment to avoid the exposure of its technology or entering a JV with a local firm, which allows R&D spillovers to a third firm under imperfect IPRs. JV is the equilibrium market structure when extra rents can be gained from a JV. This occurs when R&D intensity is moderate and IPRs strong. The South can gain from increased IPR protection by encouraging a JV, whereas policies to limit foreign ownership in a JV gain importance in technology intensive industries as complementary policies to strong IPRs. The South never finds it optimal to fully protect IPRs and concede all bargaining power in a JV to the Northern firm.
Keywords: Joint ventures, intellectual property rights, FDI policy, technology transfer, R&D spillovers, bargaining, development
JEL Classification: F13, F23, L24, O24, O32, O34
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Contracts, Intellectual Property Rights, and Multinational Investment in Developing Countries
-
Mode of Foreign Entry, Technology Transfer, and FDI Policy
By Aaditya Mattoo, Marcelo Olarreaga, ...
-
Mode of Foreign Entry, Technology Transfer, and Foreign Direct Investment Policy
By Aaditya Mattoo, Marcelo Olarreaga, ...
-
What Do Rich Countries Trade with Each Other? R&D and the Composition of U.S. And Swedish Trade
By Magnus Blomstrom, Robert E. Lipsey, ...
-
Technological Asymmetry Among Foreign Investors and Mode of Entry
-
Technological Leadership and the Choice of Entry Mode by Foreign Investors
-
Technological Leadership and Foreign Investors' Choice of Entry Mode
-
Competition Law in Bulgaria after Central Planning
By Bernard Hoekman and Simeon Djankov
-
Technical Compatibility and the Mode of Foreign Entry Under Network Externalities
By Mikhail M. Klimenko and Kamal Saggi